Welcome, everybody, to meeting number 85 of the Standing Committee on Industry, Science and Technology. Pursuant to Standing Order 108(2), we have a briefing on broadband connectivity in rural Canada. This is for the first hour, and then in the second hour, we'll go in camera to discuss where we go from there.

I want to welcome back Mr. Dreeshen. This originally was Mr. Dreeshen's motion, and while he's not part of the committee, I hope nobody has any objections to his sitting in on both parts of this.

Good morning as well to all members of the committee. My name is Susan Hart, and I am the director general of the connecting Canadians branch, Innovation, Science and Economic Development, which administers two rural and remote broadband programs, the Connecting Canadians program and the Connect to Innovate program that was launched as part of federal budget 2016.

I am pleased to appear in front of this committee for the second time to provide an update on the newly launched Connect to Innovate program. I do have with me three other members from the department: my director of engineering, Luc Delorme; André Arbour, who is from the telecom policy branch; and Adam Scott, who is from the spectrum part of the department.

Since my last update before you in the spring, we have continued our effort towards bridging the digital divide across the country with the Connecting Canadians and Connect to Innovate programs. As some of you know all too well, the vast majority of urban Canadians have access to 50 megabits per second, while only 41% of rural households can claim access to such speeds. The gap is even larger for indigenous households. Schools, hospitals, first nation band offices, and courthouses in these communities do not have the broadband capacity needed to support their people.

Seventy-seven indigenous communities rely on satellite links for all their communications needs and face even greater challenges that make many things impossible, such as telemedicine and distant court hearings, to name a few. This explains in part why the demand on Connect to Innovate has been remarkably high.

Just to inform new members of this committee, the Connect to Innovate broadband program stems from a Budget 2016 initiative.

Before its launch, the parameters of the Connect to Innovate program were subject to considerable consultations with over 300 organizations.

The Connect to Innovate program is focused on investing in backbone networks, the digital highways that carry traffic among communities.

The consultations made it possible to expand these parameters and to include “last mile” projects. The submission period for Connect to Innovate funding applications ended on April 20, 2017.

We were popular. We received 892 projects totalling $4.4 billion in funding requests for a budget envelope of only $500 million. Applications came from all provinces and territories. The majority of the projects funded through Connect to Innovate will go towards backbone infrastructure. The investments will also result in improved residential service, which I know is of interest for some members of this committee. Connect to Innovate projects will enable more rural households to achieve the universal target of 50 megabits per second.

Over the past few months, my team and I started to assess these 892 projects based on the program objectives.

The successful projects have started to be announced and will continue to be approved through the fall and winter. To date, announcements under Connect to Innovate represent a total project value of $488 million, with a total investment of $177 million from the Connect to Innovate program.

For example, this summer the government announced a project covering all of Nunavut with high-throughput satellite backbone connectivity that will have more than 10 times the capacity of the existing service. Canadians in all 25 Nunavut communities will be able to do business online, participate in distance education, and search for jobs online.

The government also made an announcement in October for residents of five first nations communities in northern Ontario, who will be connected through a fibre-optic infrastructure.

These communities will soon be able to enjoy improved access to remote training and to new business avenues, thanks to a joint investment from the Government of Canada through Connect to Innovate and the Province of Ontario.

As stated by the CEO of the Matawa First Nations Management:

The Matawa first nations are thrilled with the funding investments for this legacy project that addresses our long-standing community concerns.

I have one last example, Mr. Chair.

Last Monday, the federal government and the Government of Quebec announced the funding of projects in the Mauricie region, as well as several projects in Quebec, whose details will soon be announced.

The implementation of these three Mauricie projects will provide high-speed Internet access to over 5,000 households.

We can find the details of these announcements on our website.

These are some examples of projects that will help close the digital divide. They will equip Canadians in rural and remote regions with the tools they need to compete in an increasingly digital and global economy.

As mentioned, the government will continue to announce projects over the coming weeks.

I would now be happy to answer any questions the committee may have on rural broadband in Canada.

Thank you, Mr. Chair, for this opportunity to talk about broadband Internet services and the regulatory action to be taken by the CRTC to increase access in rural and remote areas of Canada.

My name is Chris Seidl. I'm the executive director of telecommunications and currently the acting secretary general of the CRTC.

During my previous appearance in May, I mentioned that the CRTC believes that all Canadians, no matter where they live, should have access to broadband Internet services on both fixed and mobile networks. This conviction is clearly stated in the CRTC's December 2016 announcement that broadband Internet is now considered a basic telecommunications service. In the modern era, telecommunication networks are fundamental components of public infrastructure, much like electricity grids were a century ago or railways were at the time of Confederation.

There is no doubt that broadband will play a pivotal role in Canada's future economic prosperity, global competitiveness, and social and democratic development.

All Canadians wherever they live should be able to participate in, and contribute to, this country's prosperity. Improving access to broadband Internet services will help to achieve this goal.

The CRTC's newly established universal service objective calls for all Canadians to have access to broadband at download speeds of at least 50 megabits per second, Mbps, and upload speeds of 10 megabits per second. Both of these goals are for fixed Internet access services. The speeds are 10 times faster than the targets set back in 2011, a reflection of the rapid rate of technological change and of the pace set by our international competitors.

At the end of 2016, 84% of Canadians had access to the Internet at the new speed targets. By the end of 2021, we expect that 90% of Canadian homes and businesses will have access to these speeds, and that the remaining 10% will join them within 10 to 15 years.

The latest data from the CRTC's “Communications Monitoring Report”, which was recently published, demonstrate that even greater numbers of Canadians are subscribing to higher broadband speeds.

Five years ago, for instance, less than 4% of Canadian Internet service subscribers had download speeds of at least 50 megabits per second. In 2016, some 26% subscribed to services with download speeds of at least 50 megabits per second. The amount of data that Canadians access online also continues to grow. Between 2015 and 2016, downloads and uploads from residential Internet connections grew by more than 23%, to 128 gigabytes per month. These trends seem destined to continue well into the future.

Canadians should be able to have access to an unfettered Internet experience. They should be able to access the applications of their choice for such needs as banking, commerce, entertainment, and education, and not feel limited by concerns over data usage. Therefore, our universal service objective calls for all Canadians to have access to an unlimited data option for fixed broadband.

In fact, more and more Canadians are taking advantage of this option. At the end of 2016, 23% of residential Internet subscribers had a plan that provided unlimited data usage. That is almost double the amount since 2012.

The CRTC also recognizes the importance of mobile broadband. At the end of 2016, 98.5% of Canadians can access long-term evolution, or LTE, the latest mobile technology. Approximately 25 million Canadians subscribe to mobile Internet services. The commission's new universal service objective calls for the latest generally deployed mobile wireless technology to be available to all Canadians, not only in homes and businesses but also along as many Canadian roads as possible.

As members of this committee are undoubtedly aware, however, some areas across the country have limited access to Internet services. In fact, approximately 16% of Canadian households cannot access Internet services that meet the universal service objective. Most of these households are in rural and remote areas of Canada, including the Far North, as well as in many regions not too far from urban centres.

The longer these underserved regions lag behind their urban counterparts, the more it hinders this country's social and economic development.

Because the CRTC designated broadband Internet service as a basic telecommunications service, we are able to establish a fund to help bridge the gap. The fund will provide $750 million over five years to support projects that will improve Internet services in areas that do not meet the universal service objective. The fund will support both fixed and mobile projects that upgrade existing infrastructure or build new infrastructure.

The CRTC's ultimate objective is to ensure that the services available in rural areas are comparable to those available in urban centres and that connectivity infrastructure supports the evolving needs of Canadians. Our goal is to support projects that maximize impacts and minimize contributions from the fund.

Applicants will have to secure a minimum level of financial support from either some level of government—federal, provincial, regional, municipal, or indigenous—or community groups and non-profit organizations. Applicants will also need to invest in proposed projects and clearly demonstrate how projects will achieve the targets for speeds, capacity, and quality of service.

Much like other programs, the fund will rely on a competitive bidding process and objective criteria. A third party administrator at arm's length from the CRTC will manage the fund in a transparent, fair, and efficient manner. The CRTC will oversee the fund and approve projects.

The new CRTC broadband funding regime will be designed to complement, not replace, existing and future investments from the public and private sectors. This includes the Government of Canada's Connect to Innovate program.

The CRTC works closely with Innovation, Science and Economic Development Canada to collect and share data about broadband deployments. Mapping the availability of broadband and mobile networks is crucial to achieving the objective of bringing broadband to all Canadians.

We fully expect that Connect to Innovate, along with other public support and the CRTC's new funding regime, will lead to significant improvements in broadband access across the country.

Details about the CRTC's broadband funding regime are still being finalized. Back in April, we initiated a public consultation on the new regime. The consultation focuses on a number of issues ranging from the funding framework, including eligibility and assessment criteria, to governance, operations, and accountability.

So far we've received nearly 90 submissions from a broad range of interested parties, including members of Parliament, large and small Internet service providers, consumer groups, chambers of commerce, and representatives of municipal, provincial, territorial, and first nation governments. The public record upon which we make our decisions continues to develop, with final submissions due in December.

Given that the proceeding is ongoing, I can't provide much more detail at this time. I can, however, assure the committee that the CRTC is working diligently to publish its decision on the funding regime as soon as possible in 2018.

Mr. Chairman, much work remains to be done. Extending broadband and mobile coverage to underserved households and businesses and along major roads will require many billions of dollars of investment in infrastructure. There is no doubt that this objective is an ambitious one, in part because of the vast geography and shorter construction seasons. I'm confident, however, that the objective will be met in the same manner that railways and electrical grids were built: by connecting one community at a time.

First of all, I just want to say thank you for coming back, and thanks to Mr. Dreeshen for bringing this report potential forward.

A lot has happened since we last talked, which is why we postponed having this conversation. We knew that investments over the summertime were going to be happening.

I have a map in my mind of areas that were invested in over the summer, or that are planned investments, versus where we already have coverage. I know in your report, Ms. Hart, you talked about the investments being made. Do we know, in terms of coverage across Canada, what kind of a map we're now looking at versus where we were at the beginning of the summer?

Yes. We had an original map on our website that showed eligibility of communities across the country, with dots showing communities. I think what we were waiting for, once all projects had been selected, was to go back and refine that map to see where remaining gaps lie. In this phase we're in the middle of announcements, and there are still some funds left in the $500 million for selection. We haven't done that work yet, but it is something that we plan to do to see where gaps remain. As you can appreciate, $500 million is just a drop in the bucket.

I met with the Federation of Canadian Municipalities this week, and they talked about the investments the government made in telephones back when telephones were being developed and how the last mile really represents the challenge that we had with telephone infrastructure.

One of the last miles for me is looking towards farm fields and smart agriculture. The other last mile is going into small communities. Guelph is in between those two areas, because we're too large to be able to qualify for some programs. We could be a node, but we don't fit the funding requirements. We have farms around us that we could service. We have other communities. The last mile is a big piece. How far along are we in terms of development of that last-mile strategy?

When we talk about last mile, we're talking about that portion of the network that goes from the backbone to a residence, and I guess in your case to farms. Past programs have looked at five megabits per second, which now, with new technologies and new demands, has become less relevant.

The new universal target is 50 megabits per second, as Chris said. That's 50 megabits down and 10 up. We know that in rural areas of the country, only 39% of households can access that 50 down and 10 up. I said 41% in my speech, because the 41% is just the 50 down, but then if you take into account the 10 up, it drops to 39%.

There's a lot of work to do in the coming months and years to work towards that universal target. It's great that the CRTC has set aside a fund, but I agree with you that farms are an issue. I encourage you to put forward those ideas to the CRTC as they develop their parameters.

Clearly the focus remains on making sure that we have a solid backbone at this stage. Then comes the question of how long it is going to take to get to the last mile and of where we are going to have the highest challenge when it comes to the last mile.

With the focus on backbone, can you give us an idea, with the project that has been approved up to now and the remaining projects that you are evaluating, where we will be by the time all of these evaluations are done? Are we now covering 80% or 100% of the backbone?

Those are big percentages. I wouldn't say that we are covering 80% or 100%. It's hard to project at this point in time.

One thing I can say, when we talk about the backbone and the last mile and funding the backbone, is that getting the backbone is almost like a prerequisite. You can't increase last-mile speeds without getting the backbone. For some projects, what you'll see happening is that we will put in place a backbone, but there could already be a last-mile infrastructure in place, and this will automatically increase the speeds for the last mile. You will see those improvements.

In other cases, we have project proposals for a backbone, but the proponents will do the last mile on their own dime. They are asking us for funds for the backbone, but they will do the last mile.

The only thing I can add is to give you a sense of the scale of where we are heading. Of about 10,000 communities throughout Canada, about a thousand are considered urban, and those, obviously, are served. Of the other 9,000 or so, we had initially identified just under 4,000 communities that did not have a backbone connection. The majority are fairly small. We are talking 400 inhabitants as the average size of these communities. We initially set a target of trying to connect 300. That's going to be exceeded. We are going to do more than that, but we are not going to be able to close that entire gap.

Just in Quebec, benefits to 360 communities were announced, so we know that we are exceeding our target of 300 communities, but as Luc pointed out, the number of eligible communities was around 3,700. That's why it's a drop in the bucket.

Thank you very much, Mr. Chair. To all of my colleagues, it's great to be back here.

Welcome to our guests. We had spoken previously as well.

Our committee went to the U.S., listened to state and Senate committee hearings, and saw that the U.S. also believes that rural and remote broadband services are critically important. They are looking at different types of solutions.

Of course, as Mr. Longfield just mentioned, FCM are here this week, and one of the key things they are talking about is making sure we have strong broadband connectivity throughout the country. One of the other groups that is also associated with that is the AAMDC, which is focused more on the needs of rural municipalities.

We've had a year to deal with Connect to Innovate. I always go back to what we had started: Connecting Canadians. We've had a year to take a look at Connect to Innovate. At the time, there was a discussion about making sure we talk to different organizations. Ms. Hart, you mentioned 300 organizations you have spoken with, and you have the input from them.

I think the major focus on what's going to happen in the future is what's critical, because we've always wanted to talk about being flexible. We've seen the range going from five to 50. Then in the discussion Mr. Seidl had, you talked about being able to get, I think, 90%—or a certain percentage—of this and that we could probably get the rest of them up to speed within 10 to 15 years. Well, with this technology, unfortunately, unless you can find a way to leapfrog so that it can be dealt with, 10 to 15 years is not going to solve the problem we're dealing with here.

Looking at some of the discussions you've had on the technical side, are there things we can look forward to in these extremely rural and remote areas that we can use to solve some of these problems?